voluntary organisations, social enterprises and volunteering
voluntary organisations, social enterprises and volunteering
voluntary organisations, social enterprises and volunteering
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New Accounting Rules: What They Will Mean for Your Organisation
Created: 12/11/2025
News/Events Category: Governance
From 01 January 2026, only charities with annual turnovers of more than £15m will have to produce a detailed cashflow statement
How they apply to organisations will vary depending on their income, according to the new Charities Statement of Recommended Practice (SORP).
For accounting periods beginning after 01 January 2026, only charities with annual turnovers of more than £15 million will be required to produce a detailed statement of cashflow.
Following a consultation earlier this year, there will be less stringent requirements for charities with incomes over £500,000 and the lightest touch rules for smaller voluntary organisations.
In finalising the new accounting framework, the charity regulators across England and Wales, Scotland and Northern Ireland (who together make up the SORP-making body) have balanced a desire for simplicity and clarity for charities with the importance of transparency for donors and interested third parties.
The new SORP includes refreshed annual report requirements for trustees, with further guidance added on how to report financial reserves and plans about the future.
It has added dedicated sections for areas of public and donor interest including impact reporting, environmental, social and governance issues with associated guidance on reporting.
There are also updates to how charities should account for social investments, designed to align with the definition of such holdings in the Charities Act 2011.
The new SORP also aims to make requirements for reporting provisions and contingencies easier to understand.
Key changes: a breakdown
The SORP update, which will take effect for accounting periods starting on or after 01 January 2026, includes:
- New requirements for how charities should report on certain types of income and lease arrangements. The SORP now includes charity sector specific examples to assist charities in applying new requirements introduced by the Financial Reporting Council’s update to Financial Reporting Standard 102.
- Three new tiers that set out expectations for increased transparency for the largest charities:
- Tier 1 – for charities with income up to £500,000
- Tier 2 - for charities with income between £500,000 - £15 million
- Tier 3 - for charities with income above £15 million
- Refreshed Trustees Annual Report requirements, with further guidance added on how to report financial reserves and plans about the future. Areas of particular public and donor interest – including impact reporting, environmental, social and governance issues – now have dedicated sections, with associated guidance on reporting.
- Updates to how charities should account for social investments, making it simpler for charities to report on such holdings and aligning the definition of social investments in SORP with the definition in the Charities Act 2011.
- Easier to understand requirements for reporting provisions and contingencies.
Full information can be found on the Charity SORP website: Home - SORP
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